Brent: War-linked range trading outlook – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad notes Brent crude has rallied above $91 as the US–Iran Strait of Hormuz standoff persists. Haddad argues crude Oil is driving the war narrative and expects price swings to steer escalation risks.
Brown Brothers Harriman (BBH) analyst Elias Haddad reports that Brent crude has surged above $91 per barrel, driven by the ongoing US-Iran tension in the Strait of Hormuz. Haddad predicts that oil price movements will continue to shape the escalation and de-escalation of the conflict, keeping Brent crude within a $70–$100 range.
The price hike is also exerting upward pressure on bond yields and exacerbating already precarious fiscal conditions. Simultaneously, the uptick in oil prices is causing equity markets to decline and the US dollar to recover from its recent dip. Despite the potential for a dovish Federal Reserve rate change, the risk of a deeper and longer USD rebound appears slim.
Some argue that the dollar could face vulnerability due to a stock market correction, but the prevailing view is that a broad sell-off would only prompt investors to seek refuge in safe-haven Treasuries, reinforcing the dollar's defensive qualities.
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